Retired FBI agent Robert G. Lustyik Jr., leaves federal court in Salt Lake City on Tuesday, Oct. 30, 2012. Lustyik pleaded not guilty to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized. Prosecutors say he was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. (AP Photo/Rick Bowmer)Retired FBI agent Robert G. Lustyik Jr., center, stands with his attorneys Raymond Mansolillo, left, and J. Michael Hansen, after a federal court hearing in Salt Lake City on Tuesday, Oct. 30, 2012. Lustyik pleaded not guilty to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized. Prosecutors say he was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. (AP Photo/Rick Bowmer)Retired FBI agent Robert G. Lustyik Jr., center, walks with his attorneys Raymond Mansolillo, left, and J. Michael Hansen after leaving federal court in Salt Lake City on Tuesday, Oct. 30, 2012. Lustyik pleaded not guilty to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized. Prosecutors say he was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. (AP Photo/Rick Bowmer)Retired FBI agent Robert G. Lustyik Jr., leaves federal court in Salt Lake City on Tuesday, Oct. 30, 2012. Lustyik pleaded not guilty to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized. Prosecutors say he was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. (AP Photo/Rick Bowmer)Retired FBI agent Robert G. Lustyik Jr., right, and his attorney Raymond Mansolillo, leave federal court in Salt Lake City on Tuesday, Oct. 30, 2012. Lustyik pleaded not guilty to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized. Prosecutors say he was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. (AP Photo/Rick Bowmer)

This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A former FBI agent and a military contractor snared in a government fraud investigation each pleaded not guilty Tuesday to conspiracy, wire fraud and obstruction of justice charges during a brief hearing in U.S. District Court.

Prosecutors allege greed drove Robert G. Lustyik Jr., who worked as a counterintelligence specialist for the FBI in New York, to attempt to derail the case against Michael Taylor of Boston. In exchange for his help, Taylor allegedly promised to include Lustyik in lucrative business deals that involved gold, oil and alternative energy deals in the Middle East and Africa.

Prosecutors allege Taylor, 51, of Boston, and president of American International Security Corporation, conspired with two other men to defraud the U.S. military of millions after landing a contract to provide security and training to Afghan commandos.

Taylor has been detained in the Davis County Jail since his arrest and indictment in that case. Lustyik, 50, remains free. He was suspended and then retired from the FBI in September.

Boston attorney Raymond Mansolillo, who is representing Lustyik, vowed Tuesday after the brief court hearing that his client would present a "wonderful defense."

"We feel confident we're going to be exonerated," Mansolillo said.

Mansolillo also said he would not try to get the case moved to New York, where Lustyik lives, because he's been so "well received" by the court in Utah.

"We're fine with fighting the charges here," Mansolillo said, adding, "what better place to fight a charge of government abuse than Utah?"

However, prosecutors want Mansolillo disqualified from representing Lustyik, claiming he has a conflict of interest because of ties to Taylor and one other individual in the tangled cases.

In a hearing earlier this month, Mansolillo said prosecutors were using out-of-context snippets of emails exchanged between Lustyik and Taylor to build an "almost novel-like" case. As Taylor dangled business payoffs in the millions, Lustyik promised to "sway this your way" and "to blow the doors off this thing," according to court documents filed by prosecutors.

The two met in 2009, according to court documents, and developed a business relationship just as Utah investigators began a criminal investigation that included Taylor, whom they allege used inside information to land a military contract that eventually netted $54 million. Prosecutors say about half that sum was ill-gotten.

Taylor allegedly sought Lustyik's help after learning about the investigation. Lustyik first sought to block the investigation by enlisting Taylor as a confidential source and then as a cooperative witness in the case, a status that offered some immunity. He also enlisted numerous current and former FBI agents as character witnesses for Taylor, who had worked on other government investigations in the past.